Frencken - RHB Invest 2023-04-21: Inventory Still High, Demand Remains Soft

• We expect Frencken (SGX:E28) to incur higher costs from new production sites and newly expanded capacities. Its biggest semiconductor sector customer ASML now faces risks of order cuts by its own major client, Taiwan Semiconductor Manufacturing Co (TSMC). On these near-term headwinds, we trim FY23-24F earnings forecast for Frencken by 6% and 5%.
• - Read this at SGinvestors.io -

Frencken's FY22 earnings are largely in line

• - Read this at SGinvestors.io -
• Revenue for the integrated manufacturing services (IMS) division declined by 11% y-o-y, due to the weaker-than-expected recovery of the global automotive industry amid supply chain disruptions.

Gross profit margin narrowed to 15.1% (-1.7ppt) as a result of cost pressures in Europe, and higher depreciation costs from its global manufacturing expansion. This also pulled its EBIT margin down to 8.5% (-0.9ppt) despite some operational cost efficiencies.

A first and final dividend of 3.64 cents was declared.

High inventory, weak demand in semiconductor cycle is still in play.

• Read more at SGinvestors.io.

Singapore Research RHB Securities Research | https://www.rhbgroup.com/ 2023-04-21 SGinvestors.io

---